Prenuptial and postnuptial agreements protect your wealth by setting out what property stays yours, what property does not, and ensuring that your assets stay in your family line. Prenups can even be used to limit your exposure to paying alimony. But can you get out of a prenuptial agreement?
What are Prenups?
A prenuptial agreement (or “prenup” for short) is a contract between people intending to marry. A prenup determines spousal rights when the marriage ends by death or divorce.
If you divorce without a prenup, your property rights are determined under state law, and a spouse may have a claim to alimony while the suit for divorce is pending and after entry of a judgment.
Without a prenup, if your spouse dies, you will have statutory rights under state law to a share of your deceased spouse’s estate, and may also have a right to lump sum death benefits, or a survivor annuity under a retirement plan.
That’s where prenups come in. Prospective spouses may limit or expand these rights by an agreement. Prenups are also used to protect the interests of children from a prior marriage, and to avoid a contested divorce. Prenups can be very worthwhile provided they’re done right.”
When Prenups are done wrong
It is important to realize that the courts will not likely enforce prenuptial agreements (prenups) in certain cases. Forbes magazine recently ran an interesting article listing some of the common problems with do-it-yourself, cheap, or downloaded prenups:
- It is not a formal legal document. Only well-drafted agreements can override states that have community property laws or equitable distribution requirements.
- It is a “shotgun” agreement. If there is any form of coercing a person to sign the agreement, it can turn out to be unenforceable.
- One person failed to read the agreement. When there is proof that one or both of the spouses did not read the prenup, it might not be enforceable.
- One party is hiding or just not sharing knowledge of all assets and liabilities. Full transparency between the prospective partners is mandatory.
- It includes invalid provisions. These are terms that are illegal or against public policy. For example, the courts will not enforce prenups if they stray into areas such as waiving child support.
- Each partner does not have separate legal counsel.Both parties should – and in some states, it is a requirement – have their own legal counsel so that their separate interests are promoted.
- The agreement is unconscionable. If the prenup is so completely unfair that it puts one partner in a horrible financial situation and sets up things so the other partner is solidly financially positioned, the courts will very likely not enforce it. Unconscionable agreements are “extreme.”
Florida Prenuptial Agreements
I’ve written about prenuptial agreements before. Prenuptial agreements are about more than just resolving uncertainty in a marriage. Any couple who brings any personal or business assets to the union can benefit from one. They are also important to have in place before a couple starts investing in businesses, properties and other investments.
The most basic of prenups should list an inventory of premarital assets that would stay with the original owner in case of a divorce. Florida has both case law and a statute to help lawyers, judges and the parties determine if a prenuptial agreement is enforceable.
For example, Florida courts must consider things such as fraud, duress, coercion, in addition to the unfairness of the agreement, and whether there was any financial disclosure.
According to the Forbes article:
It’s not all that uncommon for mistakes to be made when putting a prenup in place. . . high-quality legal work is based in expertise and precision, which is why we diligently do everything possible to make sure our clients’ prenups do not get ‘busted.’
The Forbes article is here.